Eurozone PMI falls in November

In November, the eurozone's flash composite PMI index fell deeper into recession territory with the value dropping 1.9 points to reach 48.1 points compared to the previous month. This marked a significant drop and indicated that the euro area economy slipped into contraction in the fourth quarter. Moreover, the significant slowdown in economic activity is evidenced by decline in orders and underperformance of manufacturing sector. Further, for the first time since January this year, the flash PMI index for the service sector has entered the recession zone. Sentiment in France deteriorated visibly due to the contraction in economic activity in services, but also due to pessimistic expectations. In contrast, outlook in Germany has improved slightly, most importantly flash PMI index in the manufacturing sector climbed slightly up in November. The current uncertainty related to the geopolitical tensions has strongly impacted expectations, as the possibility of trade wars has increased since the US presidential elections. The political situation in Germany has been complex as well, adding to the high level of uncertainty. All in all, the external environment is the source of the downside risks to our current growth forecasts.